'Massive' backlogs aid Kion and Jungheinrich, Jefferies starts at 'buy'

Kion AG

02/10/2023 07:56

** Jefferies starts coverage of Kion  KGX.DE  and
Jungheinrich  JUNG_p.DE  at "buy", saying the market is pricing
in a too negative scenario for the German forklift truck makers
    ** It cites the companies' massive backlogs at higher prices
and clear focus on price and cost control, which limits margin
erosion
    ** While demand has normalised from 2021 highs, Kion and
Jungheinrich still benefit from backlogs, double the size of
their historical levels, accumulated during the pandemic and
supply chain issues, the broker says
    ** It notes Kion and Jungheinrich together make up more than
50% of the market share in Europe, while the top six companies
in the world hold more than 70% of the global market share
    ** "All players have been disciplined and focused on
profitable growth which has helped industry margins recover," it
says
    ** It points to highly attractive risk-reward balance, with
a limited downside if the market is much weaker, but significant
upside should macro stabilise or improve sequentially

 (Reporting by Tristan Veyet)
 ((Tristan.chabba@thomsonreuters.com))